Published: June 17, 2008 10:39 pm         

Department of Insurance looks to help flood victims

TERRE HAUTE — Hoosiers affected by recent flooding would get a break if they are late paying insurance premiums, based on a request from the Indiana Department of Insurance.

The department is asking all insurance companies doing business in Indiana to implement a 60-day moratorium on cancellation of any insurance policy for flood victims who are late making payments.

It would apply to policyholders who live in counties affected by the recent storms and flooding that have been declared state or federal disaster areas.

The 60-day moratorium began Tuesday but would retroactively cover the storms from their inception May 30.

State Insurance Commissioner Jim Atterholt issued a bulletin on Tuesday calling for the moratorium. The bulletin also asks for a waiver of any penalties or late fees during the moratorium.

“People are hurting and the last thing they need to worry about is having their various insurance policies canceled during this very difficult time,” Gov. Mitch Daniels said in a prepared statement.

This action will give policyholders in the Indiana counties affected by the disaster an additional 60 days to pay their premiums.

Doug Webber, chief legal counsel for the state agency, said the bulletin is not legally binding, “But I’m anticipating 100 percent cooperation,” he said. “I think most companies would be slow to disregard this.”

It’s another effort by the state — working with insurance companies — to provide some relief to flood victims, Webber said.

When Commissioner Atterholt approached various insurance associations and individual companies with the idea of a moratorium on cancellations, the response was positive, he said. “The response by the insurance industry to this bulletin has been overwhelmingly supportive,” Atterholt stated.

Thomas J. Pitts, an agent for Allstate Insurance in Terre Haute, said the state’s request “is a good thing.”

He noted that Allstate, on a case-by-case basis, already has been working with customers who have personal hardship. “We can defer payment for several months or put them on a different payment plan and it does not cost them more,” Pitts said. This was something Allstate did even before the flood.

The important thing is for customers to let the company know about their hardship, Pitts said.

He believes other companies probably do the same in working with clients who face personal hardships or catastrophes.

State officials emphasize the “moratorium” is not a waiver; it is only an extension of the grace period in which to pay the premium.

After the 60 days, the policyholder will have to resume making premium payments.

The state department is asking insurance companies to work with affected policyholders when the moratorium ends by either allowing a repayment plan or a further extension in paying the amount due in full.

This moratorium applies only to cancellations/non-renewals attributed to a failure to pay premiums during the 60-day period.

Similar moratoriums are taking place in Illinois and Iowa, according to the Property Casualty Insurers Association of America.

“We understand that residents are trying to get their lives back in order and this is one of the many things the insurance industry is doing to help,” said Greg LaCost, assistant vice president and regional manager for Property Casualty Insurers.

Sue Loughlin can be reached at (812) 231-4235 or sue.loughlin@tribstar.com.